Chinese Yuan Revaluation in 2005

The revaluation helped the China to relieve the tensions that have been developed from failed financial situations for which the inability to pay the debts of the China

China 's top trade partner is United States . The US gave much pressure on China to revalue the currency . The US also threatened the China that US may impose 27 .5 tariff on all Chinese imports within six months , if China did not revalue the currency . Ultimately , China revalued its currency . The revaluation of Chinese currency have only little impact on the US

trade deficit however it increases the mainland 's economy and also benefit other Asian nations . The change between 10 to 20 of Yuan may lead the change of U .S trade deficit by 0 .05 percent of gross domestic product

ADVANTAGES

IMPORTS

Due to cheap value of China currency , China 's trade balance is in down position since 2004 which ultimately accumulation of deficit . Huge increase of machinerary , metals and petroleum products noticed with recent industrialization . The increase of Yuan value help imports trade .INVESTMENT OPPORTUNITES

With the increased value of Yuan , the investment and expansion at abroad is possible . It is also expected by the Chinese government 50 mainland firms who belongs to Fortune 500 companies may make investment by 2010 at 4 billion . It is evidently noticed such investment by the acquisition of IBP 's PC division which is overseas investment and such investment grown 50 since 2000

REDUCTION FOREIGN DEBT OBLIGATION

The revaluation of Yuan helped the reduction of China 's dollar external debt obligations . During the reevaluation time China owned approximately 180 billion of external debt and due to such revaluation the debt is undervalued with 15

DISADVANTAGES

EXPORT DEPENDENT

Since the China 's economy depends upon the exports . Stronger Yuan make Chinese goods more...